The world’s rich are spending on luxury goods like it’s 1999

Despite High Inflation, Job Uncertainty Recession Fears, Affluent Still Buying Chanel Bags, Dior Jackets, Cartier Watches

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On October 11, the same day the IMF warned of darker economic clouds on the horizon, the world’s biggest luxury company posted surprisingly strong sales, suggesting that wealthy shoppers’ appetite for high-end goods was nowhere near sated. LVMH Moet Hennessy Louis Vuitton managed to beat analyst estimates at four of its five main divisions. The biggest and most profitable one, which includes houses like Christian Dior, where a single dress can command nosebleed prices, led its growth march once again.

In a call with analysts, CFO Jean-Jacques Guiony was asked about the divorce” between global economic fundamentals sharply rising interest rates, widespread inflation, and looming recession and the resilience of the luxury industry. Luxury is not a proxy for the general economy,” Guiony said. We end up selling to affluent people and they have a behavior on their own, which is not necessarily totally aligned with economics.”

In other words, while grocers see their customers become penny wise when inflation strikes, Louis Vuitton can boost prices without immediately hurting demand.